The essentiality of the condition for court approval in a property sale agreement and the inability of the purchaser to waive the necessity for court approval.

Sir Madhavan Nair:-

This is an appeal by the plaintiff-appellant against a judgment and decree of the High Court of Judicature at Lahore, dated 29th March 1944, which reversed a decree of the Court of the Subordinate Judge, First Class, Lahore, dated 30th November 1943, and dismissed the suit.

[2] The appeal arises out of a suit for specific performance of an agreement for sale of property situate in the town of Lahore, known as the "Cinema property." The agreement was executed by Ram Jas defendant 3 (respondent 4) for himself, and as proprietor, Pahlad Das and Bhagwan Das, in favour of the appellant through his broker Dina Nath Sodhi, and was dated 12th July 1942. The property was to be sold for Rs. 6,50,000.

[3] The material terms of the agreement are found in the letter written by the broker to Ram Jas. The terms mentioned in that letter are as follows:

1. That the property will be conveyed to my customer free of all encumbrances, charges, liens, attachments and all other defects of titles whatsoever.

2. This offer is subject to your immediate acceptance.

3. A cheque for rupees one lac by way of earnest money will be issued in favour of the person or persons to be named by the attaching Court at the time of its giving approval to the transaction and delivered inside the Court.

4. The balance consideration money, viz., rupees five lacs and fifty thousand will be paid before the Sub-Registrar, Lahore, at the time of registration of the sale deed within thirty days of the approval of the offer by the Court, or as directed by the Court.

5. That possession of the property will be delivered to the purchaser immediately this sale deed is registered.

[4] This offer was accepted on 12th July by Ram Jas in the following terms: "I accept this offer and confirm the bargain subject to Court's approval." The above contract was not carried out, and the property was sold in the circumstances mentioned below, to the Guarantee Life and Employment Insurance Company Ltd., defendant 4 (respondent 1) for Rs. 6,70,000 on 23rd July 1942.

[5] The property belonged to a joint Hindu family which carried on business in the city under the name and style of Pahlad Das Bhagwan Das. At the material time, Raja Ram, defendant 2 (respondent 3) Ram Jas defendant 3 (respondent 4) Ishar Das, Parmeshri Das and their descendants formed its members. The father of the defendants was Bhagwan Das, the son of Pahlad Das. Raja Ram was the karta of the family, but be executed on 9th August 1939, a power of attorney in favour of Ram Jas, and Ishar Das not a party to the suit, authorising them jointly and severally to "do all acts relating to money dealings, sale of property etc., and execute every kind of document." The suit contract was executed under this power of attorney.

[6] The business carried on by the family failed, and since 1929, it had been engaged in litigation. In 1929, Raja Ram and his brothers handed over the immovable properties of the family to certain trustees for the benefit of creditors. These trustees managed the estate for about six years when, owing to litigation by order of the Court of the Subordinate Judge of Lahore, the properties were put into the possession of the receiver appointed by the Court.

[7] Besides a large number of unsecured creditors, the principal secured creditors of the family were the Punjab National Bank Limited, Lahore, the Allahabad Bank Limited, and the Lakshmi Insurance Company Limited, Lahore. The total liabilities of the family to the secured and unsecured creditors in July 1942, had mounted up to about Rs. 7,09,184. Besides the decrees for sale obtained by the three mortgagees the property was under attachment in execution of money decrees obtained by the estate of Sir Moti Sagar and Dewan Anand Kumar. The execution of the mortgage decrees was pending in the Court of Mr. Fazal Haq, Lahore, and he had ordered the property to be sold by public auction on 24th, 27th and 29th July 1942. The auction sale was in execution of the decree